Capabilities are the result of routines, little sub-processes that combine with many others to ‘express’ the capability, just as genes express proteins. Failing fast, for example, requires routines for anticipating the future, assessing technical and commercial risks and objectively assessing the viability of a technology, along with many others. Importantly, a capability can fail to be expressed even when the organisation has most of the required routines but still lacks one or two critical ones. In this respect, routines are much like genes. They store information, can be copied and work together to achieve expression. For this reason, a firm’s complete set of routines, which can run to tens of thousands of routines, is known as its Routineome.

If you’re beginning to think that building a highly capable organisation is difficult, you would be right. But even that is not the whole story, because each routine’s functioning depends on the convergence of four factors known as microfoundations. These are the Attributes of the individuals (eg, skills and knowledge), the processes that happen within working Groups, the structures that link those Teams together and the mechanisms used to manage Conflict between them. As these capitalisations are meant to imply, these microfoundations, abbreviated to AGTC, are analogous to the bases from which genes are built. The analogy is a good one because the functioning of the Routineome, and so the expression of the Capabileome, depends on the exquisite combination of the right AGTC microfoundations. Just as errors in the base pair sequence can lead to genetic defects and illnesses, so gaps and errors in firms’ microfoundations can lead to critical flaws in the ability of firms to function.

This Generalised Darwinian view of how organisations function gives a valuable, novel perspective on the challenges facing ARPA-H. The capabilities they will need will be not only advanced and complex but, to a large degree, new and unusual in the healthcare arena. At the moment, healthcare innovation is a largely incremental process that is dispersed across a wide ecosystem of organisations. From the NIH to biotechs, from contract research organisations to global companies and from regulators to payers, healthcare innovation is a collaborative exercise that mostly proceeds in baby steps. But the intent of ARPA-H is to augment this with one organisation that takes big leaps and unmitigated risks. That probably implies that dozens of novel capabilities and hundreds of new routines, underpinned by many context-specific microfoundations, need to be invented. This is especially problematic, given how unlike existing healthcare industry capabilities they are. For example, we work in an industry that, quite understandably, is not famous for moving fast or for taking unnecessary risks or looking beyond the technologies it is familiar with. If ARPA-H wants to build the capabilities it will need, it will have to build these things from scratch or absorb them from other industries. Traditional biomedical organisations will not be a good source for non-traditional, groundbreaking ways of doing things.

Understanding that effective organisations are capable organisations and that capabilities arise from routines, and ultimately microfoundations, is a sobering lesson. It reminds us that building ARPA-H, or indeed any other effective organisation, takes more than just an eye-watering budget. We should be realistic about the challenge. At the same time, evolution is smarter than we are, to quote Orgel’s second law. We can be optimistic that, if the environment favours the emergence of ARPA-H, it will evolve. But it will be hard.

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